Certain Relationships and Related Transactions

12 Months Ended

Dec. 31, 2021

Related Party Transactions [Abstract]

Certain Relationships and Related Transactions

Certain Relationships and Related Transactions

Information concerning certain relationships and related party transactions between us and certain of our current shareholders and officers is set forth below.

Emmett J. Wood, the brother of our Chairman and CEO, has been an employee of ours since 1996 and currently serves as executive officer. The amounts paid to this individual as compensation for 2021, 2020, and 2019 were $492,000, $1,238,000, and $529,000, respectively.  Additionally, Mr. Wood owned 73,562 and 682,502 shares of the Company’s common stock as of December 31, 2021 and 2020, respectively.

On March 31, 2015, the Company entered into the Porter Notes. Mr. Porter and Toxford Corporation, of which Mr. Porter was the sole shareholder, owned 35.0% of our Class A Common Stock. Under the terms of the Porter Notes, Porter lent the Company $2.5 million on or about March 31, 2015. According to the terms of the Porter Notes, the outstanding principal sum bore interest at the fixed rate of twelve percent (12%) per annum, which would be payable in arrears in cash on the 20th day of each May, August, November and February, with the first interest payment date due on August 20, 2015. The Porter Notes did not call for amortization payments and were unsecured. The Porter Notes, in whole or in part, may be repaid at any time without premium or penalty. The unpaid principal, together with interest, was originally due and payable in full on July 1, 2017. On April 18, 2017, we amended and restated the Porter Notes to reduce the interest rate from twelve percent (12%) to six percent (6%) per annum, to be accrued, and extended the maturity date from July 1, 2017 to July 25, 2022. Telos also entered into Intercreditor Agreements with Porter and EnCap, in which the Porter Notes were fully subordinated to the Credit Agreement and any subsequent senior lenders (including Action Capital), and payments under the Porter Notes were permitted only if certain conditions were met. All other terms remained in full force and effect. We incurred interest expense in the amount of $319,000 and $330,000 for the years ended December 31, 2020 and 2019, respectively, on the Porter Notes. On November 23, 2020, upon the closing of the IPO, the Porter Notes were paid in full.

One of the Company's directors serves as a consultant. The amount paid for his consultancy services were $282,000, $270,000 and $270,000 for 2021, 2020 and 2019, respectively.

On February 8, 2021, we hired Ms. Donna Hill, as Director of Human Resources, reporting directly to Ms. Nakazawa, EVP of the Company. Ms. Hill is the sister of Mr. Edward Williams, former COO of the Company.